Homeownership

Asset Building News Week, 3rd Edition

January 20, 2012
Publication Image

The Asset Building News Week is a weekly Friday feature on the The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include taxes, the housing crisis, prepaid cards, public benefits reform, prize linked savings, economic mobility and inequality, and education.

William Elliott: Does Structural Inequality Begin with a Bank Account?

January 12, 2012
Publication Image

As we announced last week, the Asset Building Program and the Center for Social Development at Washington University in St. Louis are co-releasing a series of reports, Creating a Financial Stake in College, by William Elliott III on the importance of children's savings and college outcomes. The second report in the series is being released today and is available for download here. The press release from last week is also available here.

New Feature: Asset Building News Week

January 6, 2012
Publication Image

Way back in 2011, we conducted a survey of readers that told us a number of things: importantly, we learned that many of you look to us for timely news from the asset building field and that a regular round-up of articles would be a welcome addition to our other content. In keeping with the spirit of 2012 and resolutions and all that good stuff, the Asset Building Program is introducing a new weekly blog feature: a Friday news round-up. We hope this will help you (and us, for that matter) keep up with developments in the field, note-worthy news, and learn about partner organizations working around the U.S. on asset building, economic security, anti-poverty policy, and accessible financial services for low- and middle-income Americans. Topics will vary week-to-week (and depending on the news!) but we’ll aim to provide a diverse overview of the things we’re keeping an eye on that we think you’ll find interesting too.

Fannie and Freddie did not Cause the Financial Crisis

January 3, 2012
Publication Image

I missed this on my way out of town, but I wanted to steer people to this article by Joe Nocera of the New York Times.

He writes about the workings of an ideologically-driven campaign to lay the entire financial crisis at the feet of Fannie Mae and Freddie Mac, the government-sponsored entities charged with boosting mortgage lending. Yes, mistakes and miscalculations were made by these GSEs and we certainly should be asking what we can do differently, but in my opinion Nocera’s diagnosis is spot on. The subprime mortgage market had already exploded before Fannie and Freddie began purchasing these loans in earnest. In fact, they were actually late to the game. Once on the field, they began buying up these loans not to promote low- and moderate –income homeownership but to chase market share. They exacerbated the problem but hardly caused it. They should have stayed on the sidelines.

It was the drive for market share—and not the requirement to meet affordable housing mandates—that moved Fannie and Freddie into the already exploding subprime market. Nocera paints the picture of a textbook operation to muddy the waters of understanding, with staring roles played by the Wall Street Journal editorial page and the American Enterprise Institute. He calls it “The Big Lie” and it depends on an echo chamber to advance the thesis that government rather than actors in the financial sector are to blame for the advent of the financial crisis and its aftermath.

What to do about Fannie and Freddie remains an open question. The Obama administration has sketched out a set of potential options but (for some reason) doesn’t believe they can advance a reasonable, bipartisan discussion on the Hill. That’s too bad because there are important issues to address, such as how to help aspiring families become responsible homeowners in the future get out from under the debilitating debt of mortgages that exceed the value of thier homes. I wholeheartedly agree with Nocera’s conclusion:

Three years after the financial crisis, the country would be well served by a real debate about the role of government in housing. Should the government be helping low- and moderate-income Americans own their own homes? If so, is there an acceptable level of risk? If not, how do we recast the American dream?

To have that debate, though, we need a clear understanding of what role the government’s affordable-housing goals did — and did not — play in the crisis. And that is impossible as long as the Big Lie holds sway.

Don't Miss These Upcoming Asset-Building Presentations

January 3, 2012
Publication Image

If you live or work in the Washington, D.C. / Virginia / Maryland area and are interested in asset-building, you are in for a treat. During January 11-15, 2012, approximately 20 individual research papers and posters focusing on asset-building research will be presented at the annual conference of the Society for Social Work and Research (SSWR). This research is the latest and greatest from some of the leading researchers in the asset-building field, including Gina Chowa, Michal Grinstein-Weiss, Vernon Loke, Jin Huang, and Youngmi Kim. Topics include savings at tax time, financial capability of youth in international settings, home ownership and housing stability, and debt and asset accumulation. The conference will be held at the Grand Hyatt Washington. Presentations that are "don't miss" are listed below. Click on the number at the end of the titled presentation for a direct link to the complete abstract.

Follow-Up: Beyond Our Means

December 14, 2011
Publication Image

On December 13, 2011 the Asset Building Program hosted Professor Sheldon Garon, author of Beyond Our Means: Why America Spends While the World Saves. While economists often claim people save according to universally rational calculations — saving the most in their middle years as they plan for retirement and saving the least in welfare states — there are substantial differences in savings rates across high income countries. For example, Europeans save at relatively high rates despite generous welfare programs, while Americans save little, despite weaker social safety nets. The assumption that generous social benefits will provide a disincentive to save doesn’t hold up.

Top Incomes Decline, Wealth Inequality Persists

December 13, 2011
Publication Image

There are many ways to measure inequality. You can compare those at the very top and to those in the middle or the very bottom. You can look at the overall distribution of resources among the total population. Or you can look at the degrees of concentration among segments of the population. Each of these measures tells you something different. But it’s more consequential in what you choose to measure.

Jason Deparle writes in the New York Times of new data that shows how income inequality declined during the recession. He sprinkles in some quotes from a professor of entrepreurship, Steven Kaplan, implying inequality is a thing of the past and we shouldn’t be worrying about it anyway since economic growth is the problem. Likely, there are some debates over the data Deparle is citing. Is it best to use Social Security data or tax returns? Should we include earnings with wages? 

Regardless, I don’t find it hard to believe incomes at the very, very top have come down off their pre-recession highs (although I would still like to see more data). But this does not mean inequality is lessening or a problem of the past. We need to look at both income and wealth. Just because it is harder to shine a light on wealth but doesn’t mean we should not look for its impact.

As I wrote previously, inequality in America is still ascendant but the dynamics have changed. The bursting of the housing and stock market bubbles momentarily stemmed the wealth inequality tide. Yet by 2010, stock market losses were largely recouped. This wasn’t the case for housing equity, which is the largest item on the family balance sheet.

The divergence between housing values and security prices will be the main driver of wealth inequality for the foreseeable future.

Without major changes to the housing market and policy efforts designed to help families de-leverage, such as large-scale loan modifications and principle reduction, wealth holding for the majority of American households will remain depressed. Wealth at the very top will be determined by a combination of executive pay, tax rates, and returns to capital. Interestingly, it seems like the recession has ended for those at the very top but continues for the majority.

Asset Building: Wealth Inequality and Occupy Wall Street

November 17, 2011

In this podcast, Reid Cramer, director of the Asset Building Program at New America, describes the new dynamics of inequality that emerged in the wake of the Great Recession and have given rise to the Occupy Wall Street movement. Without dramatic changes to the housing market and policy efforts designed to get families out from under the overhang of debt, significant wealth inequality will persist for years to come. This is particularly apparent when recognizing the staggering growth of the racial wealth gap.

Podcast: Wealth Inequality and Occupy Wall Street

November 17, 2011


In this podcast, Reid Cramer, director of the Asset Building Program at New America, describes the new dynamics of inequality that emerged in the wake of the Great Recession and have given rise to the Occupy Wall Street movement.  Without dramatic changes to the housing market and policy efforts designed to get families out from under the overhang of debt, significant wealth inequality will persist for years to come. This is particularly apparent when recognizing  the staggering growth of the racial wealth gap. Today, November 17th, marks the two month anniversary of the protests, which should be applauded for initiating a national conversation about equality, mobility, and opportunity.

Cuba Legalizes Private Real Estate Transactions

  • By
  • Anya Landau French,
  • New America Foundation
November 4, 2011 |

On the heels of news that Cubans would now be allowed to buy and sell used cars of any kind (they used to only be allowed to do so with the pre-1950’s era almendrones sputtering around the island), today Cuba announced that natural-born Cubans and permanent residents will now have the right to buy and sell their homes, and transfer ownership to others on the island.

Syndicate content